Ripple, SEC File to Suspend Appeals Pending ‘Negotiated Resolution’ of Case

Ripple vs the SEC

Ripple Labs and the U.S. Securities and Exchange Commission (SEC) have jointly filed a request to suspend their respective appeals as they “pursue a negotiated resolution” of their long-running case.

As detailed in a filing submitted yesterday to the U.S. Court of Appeals for the Second Circuit, the two parties have already reached an agreement-in-principle, with Ripple CEO Brad Garlinghouse revealing last month that the SEC would be dropping its appeal.

Yesterday’s application represents the first official confirmation that the SEC has indeed dropped the appeal it lodged in October, while it also confirms that Ripple seeks to drop its cross-appeal.

Yet the document also makes clear that the agreement-in-principle between the two parties has not gained final approval from the SEC.

“The parties require additional time to obtain Commission approval for this agreement-in-principle, and if approved by the Commission, to seek an indicative ruling from the district court,” reads the filing, which was signed by legal representatives for both sides.

It’s possible that final SEC approval may not come until Trump nominee Paul Atkins assumes his role as chairman, although having gained Senate confirmation on Wednesday, his swearing in could only be a matter of days away.

The Dispute

SEC approval of the agreement would mark the final end of a legal dispute which began in December 2020, when the regulator filed a suit alleging that Ripple had raised $1.3 billion via the sale of unregistered securities since 2013.

July 2023 saw Judge Analisa Torres rule largely in Ripple’s favor, determining that third-party sales of XRP on exchanges didn’t constitute the offering of (unregistered) securities.

However, the SEC filed its aforementioned appeal more than a year later, contesting that securities law was violated by Ripple’s direct offering of XRP on exchanges, and by personal sales of XRP by execs Brad Garlinghouse and Christian Larsen.

The Impact

With this appeal now being dropped, the price of XRP could continue the upwards trend it began following the election of Donald Trump on November 5.

Since that date, XRP has risen by 300%, based largely on the expectation that a more pro-crypto administration would result in the end of the Ripple-SEC case.

Yet given the size of this gain, the end of the case may now already be priced in, with XRP up by only 0.2% in the past 24 hours despite today’s news, per data from CoinGecko.

Conclusion

The agreement-in-principle between Ripple and the SEC marks a significant milestone in the long-running dispute between the two parties. While the agreement has not yet gained final approval, the dropping of the appeal by the SEC suggests that a resolution is imminent.

The impact on the price of XRP remains to be seen, but with the case now seemingly resolved, investors may be looking to the future prospects of the cryptocurrency rather than the uncertainty surrounding the legal dispute.

FAQs

What is the agreement-in-principle between Ripple and the SEC? The agreement-in-principle is a tentative arrangement between the two parties that outlines the terms of their settlement.

Has the SEC dropped its appeal? Yes, the SEC has dropped its appeal, as confirmed in the filing submitted to the U.S. Court of Appeals for the Second Circuit.

What does this mean for the price of XRP? The dropping of the appeal by the SEC may continue the upwards trend in the price of XRP, although the impact may be limited given the size of the gain since November 2020.

When will the agreement be finalized? The agreement will be finalized once it gains final approval from the SEC, which may not occur until Trump nominee Paul Atkins assumes his role as chairman.